c. myblog

November 3, 2016

6 Dos and Don’ts of the NCUA’s NEV Supervisory Test

Consider the following as you implement the NCUA’s NEV Supervisory Test: DO make sure to understand your answers by running NEV with the non-maturity deposit caps the test uses (currently 1% and 4%) before NCUA comes into your credit union. DON’T forget why NCUA decided to standardize. One of many reasons is that there is […]

July 22, 2016

Be Clear on Your Objective of Doing a Core Deposit Study

Earlier this week we presented at a virtual roundtable with 100+ CFOs, and one of the most common questions centered around the benefits, or lack thereof, of doing core deposit studies for use in net economic value (NEV). It is important to study member behavior with respect to deposits, including migration, pricing strategy, and competitive […]

July 6, 2016

NCUA – Rethinking NEV

It’s no secret that the NCUA is planning to implement new guidance for net economic value (NEV) testing this year. From NCUA’s recent open meeting, some key elements of the new guidance include: Non-maturity deposit (NMD) values will be capped at a premium, not to exceed 1% in the current rate environment. NMD benefit will […]

February 4, 2016

Net Economic Value: 1 Tip on Effective Discount Rates

There are many tools that can be used to perform a model reasonableness check, or a model validation. Below we share a simple “sniff test” to help credit union CFOs and financial analysts assess one key assumption driving net economic value results, the effective discount rate applied to each loan category. Tip: Compare the effective discount […]

September 25, 2015

Observations From ALM Model Validations: High Starting NEV Ratios

When performing model validations, it is common to see a net economic value (NEV) ratio that is considerably higher than the credit union’s current net worth ratio. Understanding NEV and net worth are two completely different concepts; there are reasons why starting with a high NEV ratio in the base environment may not be reasonable. […]

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